With about 2million litres demand daily, Nigerian airlines may be saving over N30 billion annually if aviation fuel, known as Jet A1 is refined locally.
The Minister of State for Aviation, Senator Hadi Sirika told Airline Operators of Nigeria (AON) recently that was in talks with his counterparts in the Ministry of Petroleum, Dr. Ibe Kachikwu on how to dedicate one of the three refineries in the country to Jet A1 refining.
Airlines said the product is sold at exorbitant rate to them because it is imported and there are too many costs that go with the importation, including demurrage, transportation and storage, which are added to every litre of fuel sold to the airline. Besides, the uncertainty created by the scarcity of the product keeps some passengers away.
Aside the high exchange rate also reflects in the final prices of the product, which explains why international airlines are buying fuel at cheaper rate because of the low price of crude, whereas Nigerians are still buying the product at outrageous prices.
In addition, the scarcity of the product usually spreads panic among airlines and air travellers due to uncertainty, which in turn sends the prices higher and sustains the cartel, which allegedly fix the prices; as the airlines believe they would have been generating more money if tickets are cheaper because more passengers will be attracted to the airports.
According to the airlines, part of the reasons why air tickets are relatively high in Nigeria is because of the high prices of aviation fuel in addition to charges, which the passenger must have to pay, adding that passenger traffic could increase by 35 per cent with low fuel prices.
In a meeting with AON, Sirika said he met with Kachikwu, who said that the Nigerian National Petroleum Corporation (NNPC) would put the Port Harcourt Refinery on-stream before the end of the year to begin to refine Jet A1, and also that with some investment they would get Kaduna back on-stream so that the more they refine the more the fuel would be available.
“We are committed to it, we will begin to produce it and if there is anything we can do to bring down the price we will do so. The whole essence of refining it locally is not only to make it available, but it will also make it cheaper because then the element of importation is removed,” Sirika said.
Also the Director-General of the Nigerian Civil Aviation Authority (NCAA), Captain Murhtar Usman confirmed that the Minster of State for Aviation has been working to make aviation fuel available and affordable.
A senior executive of one of the major airlines in the country told THISDAY on Wednesday that with local refining of Jet A1, prices will come down, and become available and this “will give rise to cheaper flights and “we will start enjoying what other airlines are enjoying all over the world.”
He noted that the dollar exchange increases the prices of the product, adding, “ I know that government will sell to us at the cost of refining. Currently many airlines in the world are declaring profit because of cheaper oil. You cannot quantify the savings that airlines will make because scarcity which happens often helps to increase the prices and we lose passengers because of fear of cancellations.”
THISDAY
